Technical Overview

• Euro Breaks 2004 Low
• Swiss Franc Establishes Fresh 2005 High
• Canadian Dollar Heads Toward 1.2000

Traders Corner
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EUR/USD - Euro bulls tumbled below the 2004 low as greenback longs continued to push the pair toward the psychologically important 1.1500 handle. As the price action remains on the side of the greenback bulls, a further move to the downside will most likely see the dollar longs take on 1.1653, a level marked by October 22 daily low, and with sustained momentum taking on the single currency defenses around 1.1546, a level established by the October 17, 2003 daily low and a gateway toward the psychologically important 1.1500 handle. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while oversold Stochastic gives euro longs a chance to retaliate.

USD/JPY - Japanese Yen longs continued to keep the dollar longs at bay after successfully pushing the pair below the 118.00 handle. A further move from current levels will most likely see the yen longs make their way toward the 117.00 and with break to the downside aiming for the dollar bids around 115.86, a level marked by the 20-day SMA. A further move to the downside will most likely see the momentum of the yen bulls stall below the psychologically important 115.00 figure at 114.40, a level established by the October 5 daily high. Indicators remain supportive of the dollar longs with both momentum indicator and MACD treading above the zero line, with ADX above 25 at 34.55 signaling an existence of a trend not a direction of one, while overbought Stochastic adds to the trending outlook.

GBP/USD - British pound bulls tumbled like a rock after the greenback bulls managed to tarnish some of the sterling's defenses and pushed the pair toward the 1.7284, a level marked by the 2005 low. A further collapse of the cable's defenses will most likely see the pair head toward the psychologically important 1.7000 handle, a level which is being defended at 1.7086, a level marked by the November 20, 2003 daily low. A break below the 1.7000 figure will most likely see the greenback longs push their way toward 1.6877, a level established by the November 28, 2003 daily low. Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while neutral oscillators give either side enough room to maneuver.

USD/CHF - Swiss Franc longs fell back as dollar bulls continued to push deeper into the Swissie held territory established a new 2005 high at 1.3175. As the Swissie longs try to recapture previously lost territory, a move to the downside will most likely see the Swiss Franc bulls push their way below the 1.3000 figure and aim toward the 1.2900, a 20-day SMA. A further move to the downside will most likely see the Swissie longs lose momentum around 1.2781, a level marked by the 50-day SMA and is further reinforced by the 123.6 Fib of the 1.1477-1.3115 USD rally. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while neutral oscillators give either side enough room to maneuver.
 
USD/CAD - Canadian dollar bulls hastily retreated above 1.1857, a level marked by the 23.6 Fib of the 1.2730-1.1592 CAD rally after the greenback longs managed to push the pair above the 1.1900 figure. A further move to the upside will most likely see the pair head toward the 1.2027, a level established by the 38.2 Fib of the 1.2730-1.1592 CAD rally, thus seeing the Loonie bulls give up the control to the psychologically important 1.2000 handle. A further collapse of the Canadian dollar defenses will most likely see the greenback take on the Loonie offers around 1.2159, a 50.0 Fib of the 1.2730-1.1592 CAD rally. Indicators are favoring dollar longs with both momentum indicator and positive MACD above the zero line, while neutral oscillators give either side enough room to maneuver.

AUD/USD - Australian dollar bulls continued to head south as the pair tumbled below the .7300 handle only to catch a temporary relief from the greenback onslaught.  As US dollar longs resume their advance, a further move to the downside will most likely the greenback bulls take on the Aussie defenses .7286, a level established by the September 30, 2004 high, with a further move to the downside most likely seeing the pair tumble toward .7224, a level marked by the October 19, 2004 daily low. Indicators are diverging with momentum.  Indicators are favoring dollar longs with both momentum indicator and negative MACD below the zero line, while both oversold oscillators give Australian dollar longs a chance to retaliate.

NZD/USD - New Zealand dollar bulls lost more feathers to the attacking US dollar longs which managed to push the pair below the .6800 handle. A further move below will most likely see the US dollar bulls take on the New Zealand dollar defenses around .6773, a level established by July 28 daily low, and with a break to the downside most likely seeing the pair tumble toward the .6687, a 2005 low. A further collapse of the Kiwi defenses will most likely see the New Zealand dollar longs retreat toward .6615, a level established by the July 19, 2004 daily low. Indicators are supportive of the New Zealand dollar longs with both momentum indicator and MACD treading above the zero line, while overbought Stochastic gives Kiwi longs a chance to retaliate.

Sam Shenker is a Technical Currency Analyst for FXCM.